Cryptopia: What Was Left By Hackers, Could Be Taken by Liquidators

If in the beginning of this week users of troubled exchange from New Zealand, Cryptopia had any hopes to regain all their funds left after a devastating hack, now it became even less likely.

The exchange, which was placed into liquidation this week, said in the related FAQ announcement that even if the funds were not affected by the January hack, until the investigation is complete, they can't return any crypto-assets to customers, or confirm whether individual customers will get all of their crypto-assets returned.

"The hack earlier this year contributed to the issues which led to the liquidation, the current halt to trading affects the entire Cryptopia exchange," the company explained. In February, it estimated that "worst case 9.4% of our total holdings was stolen."

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The document states that “we are now undertaking an extensive process to confirm amounts owing and available to return to customers”, the priority being “to secure all crypto-assets at Cryptopia.” However, the FAQ also makes it clear that the investigation will likely take months.

Also, the answers provided by the FAQ include that the trading will most likely not resume, that the exchange will not ask for any crypto-assets or confirmation of user details, that it’s not possible to confirm any customer balances until the investigation is over, and that it remains unknown when the funds will be returned to the customers, if they’ll be returned as crypto assets or fiat currency, or if they’ll be returned at all.

No withdrawals will be allowed even if coins are deposited accidentally. In regards to that, the document also states that “At this stage there is no intention to reopen trading on the exchange. Please do not deposit any further coins with Cryptopia”, and the exchange tweeted two days ago, warning people: “PLEASE DO NOT SEND ANY DEPOSITS TO CRYPTOPIA.”

The post led to a number of debates over Cryptopia’s response to the situation, their intentions (including theories of theft), and the future of people’s coins.

I suspect that no one will ever get their coins, they will most likely be sold as company assets to pay outstanding tax, debts and staff wages. If anything is left, you may get a few percent of what remains, if anything does.

It’s clear at this point that Cryptopia will need to deal with the customers’ anger.

You guys should have let everyone know you were going to close and let everyone withdraw funds. That would have closed out thousands of accounts and made the job easier. Better to deal with a few people that lost funds in the hack than thousands of customers all over the world.